India's Oil Demand Growth Forecasts Slashed Amid Supply Crunch and High Prices

Leading energy analysts Kpler and Rystad Energy have significantly downgraded their projections for India's oil demand growth in 2024, citing persistent supply constraints and elevated fuel prices. The revised forecasts indicate that India's oil consumption expansion this year is set to be the weakest since the depths of the COVID-19 pandemic. Estimates for gasoline and diesel demand growth have seen substantial cuts, ranging from 30% to a drastic 90%, according to figures reported by Bloomberg. This deceleration is primarily attributed to the pass-through effect of higher global crude prices on domestic pump prices, dampening consumer and industrial activity reliant on these fuels. India, as the world's third-largest crude oil importer, is particularly vulnerable to shifts in global oil markets. While the absolute demand for crude is not expected to decline, the pace of its increase is now projected to slow considerably. The revisions highlight a critical sensitivity of emerging market economies to global commodity price volatility and supply chain disruptions. Despite these downward adjustments to growth expectations, analysts generally do not foresee an outright contraction in India's total oil demand. Instead, the focus is on a significant moderation from previously more optimistic outlooks, reflecting a more challenging economic environment characterized by inflationary pressures and reduced consumer purchasing power for transport fuels.